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Government is about to release a new plan that would help 3 million homeowners to avoid foreclosure.

Final deal has not been reached yet, but it should be approved quickly. Government is planning to use $50 billion from the approved bailout package of $700 billion.

The new plan calls for interest rate reductions and period of five years. The Treasury Department said on Wednesday that it is working with the FDIC and other policymakers on foreclosure-prevention measures

'We are working with the White House and through the policy process on a range of foreclosure-prevention options,' said Treasury spokeswoman Jennifer Zuccarelli.

More than 4 million Americans are behind on their mortgages and 500,000 have started foreclosure process according to the Mortgage Bankers Association.

Program which would be managed by FDIC will be available to banks, savings and loans, investment funds, hedge funds and other mortgage holders, the source said. It would encourage the lenders to rewrite the distressed mortgages, converting them into affordable plans.

There is a plan to add second mortgages on homes such as home equity lines of credit so that lenders would not lose any money in a mortgage modification.

As more and more homeowners are facing foreclosures, investors could no longer put a value on the securities which were backed by pools of mortgages. So trading of these securities froze, sending shock waves through the financial industry.

Susan Duey represents RateTake Mortgage Loan marketplace. RateTake matches consumers with multiple lenders offering low mortgage rate quotes. RateTake also operates #1 Debt Help resource center.